Manager Research

We have changed the rating of the Nedgroup Investments Opportunity Fund from Tier 3 to Tier 2.  We first rated the fund in late 2013, and at that stage we had a range of concerns relating to the fund:

• the fixed income team and process had only recently been brought into a previously equity centric business.  The team also lacked depth and breadth of research.


• the asset allocation process was fairly new and still being embedded, with the introduction of a more quantitative approach at its core.  We viewed it very much as work in progress.


• the global equity allocation was effectively covered by one person which is clearly sub-optimal


• there had been an alignment of the equity process across their equity funds to ensure less dispersion of returns between the funds, and the change was still being implemented.  This was on the back of materially poorer short term return on the Nedgroup Rainmaker fund compared to the ABAX Equity fund.

Given all these concerns, our view was that a Tier 3 rating was appropriate.

However, we have recently conducted a follow up review on the funds managed by ABAX and believe that significant progress has been made on the areas of concern.  In particular, the fixed income team appear to have settled in well, the asset allocation process continues to develop, and the changes to the equity process across the funds has now been bedded down.  Furthermore, additional resource has been allocated on the global equity side.  We also like the fact that the business has been set up so that each asset class is given due focus.

While we still have concerns regarding the global equity coverage and the team and process on asset allocation and fixed income is still relatively new, we have reached a level of comfort with the team and process to change the rating to a Tier 2.